There is not enough comparable evidence to call Washington the best—or the worst—state for business. What is clear is that new and expanded taxes have changed costs for some businesses, and technology-industry representatives have voiced concern that the changes could influence where companies start or grow. The available sources document those concerns and the tax rules; they do not show that taxes have caused companies to leave Washington.
What changed in Washington’s business taxes?
Washington’s business and occupation (B&O) tax is based on gross receipts from business activity in the state, not profit. A business can therefore owe B&O tax even in a year when it operates at a loss. The applicable rate depends on the activity, and credits, exclusions, thresholds and other rules can affect the calculation. The Washington House Finance Committee’s HB 2081 staff report describes the law and its changes.
| Change | Who or what it covers | Effective date and key detail |
|---|---|---|
| Higher service-and-other-activities B&O rate | Businesses in that category with gross income over $5 million | 2.1% beginning October 1, 2025 |
| Large-business B&O surcharge | Covered businesses with at least $250 million in Washington taxable income; the surcharge applies to the amount above $250 million | Additional 0.5% beginning January 1, 2026; the staff report gives an expiration date of December 31, 2030, subject to specified exceptions |
| Advanced-computing surcharge and cap | Businesses that meet the statutory definitions and thresholds for select advanced-computing activities | Surcharge rises to 7.5% and annual cap to $75 million beginning January 1, 2026 |
| Selected B&O rate changes | Specified business categories listed in HB 2081 | Rates rise to 0.5% beginning January 1, 2027 |
These provisions do not impose one new rate on every Washington business. In particular, the $250 million threshold for the large-business surcharge is a taxable-income threshold under the bill report’s description; it should not be confused with the gross-receipts base used for ordinary B&O tax. The report also lists exceptions, including for taxpayers paying the advanced-computing surcharge. The state Department of Revenue’s 2025 tax-legislation page and high-grossing-business surcharge guidance provide official summaries; businesses should consult current Department of Revenue guidance for their specific activity and circumstances.
Who may fall under the advanced-computing rules?
The legislative report identifies activities such as software and hardware development, cloud computing, online marketplaces, search engines and social-networking platforms. Those examples do not by themselves establish that a particular company owes the surcharge: statutory definitions and thresholds control. The Department of Revenue publishes guidance for select advanced-computing businesses.
Do these 3 things before closing this tab:
1Clear out junk files and repair common Windows errors2Fix the driver behind crashes, sound loss and screen glitches3Repair Windows errors before they cause bigger problemsWhat technology leaders are worried about
In a May 2025 article, the Washington Policy Center—a policy advocacy organization critical of the tax changes—quoted Washington Technology Industry Association representative Kelly Fukai saying: “We’re very concerned about how this will impact our companies, and if folks will make decisions to either grow outside of Washington state, or whether or not they’ll even start a company here”. The quote records a concern about future decisions, not evidence that firms have already moved or abandoned plans. The Washington Policy Center article also argues that gross-receipts taxation can weigh more heavily on low-margin businesses; that is the organization’s analysis, not a measured estimate of the tax’s effect on Washington’s business activity.
The underlying business question is whether added tax and compliance costs outweigh the advantages a company finds in Washington. The B&O structure matters to that calculation because it is not limited to profitable businesses. But the effect will differ by activity, revenue, margins, eligibility for exceptions and other operating costs. The available sources do not quantify how many companies have changed location or investment plans because of the 2025 changes.
Rank #2
Keep the 2026 high-income tax separate from B&O
Washington also enacted a separate tax in 2026, reported as 9.9% on annual income above $1 million, with collection scheduled to begin in 2028. It is an individual-income-tax measure, not a B&O rate applying to business gross receipts. Axios reported on March 12, 2026, that the measure faced legal and political hurdles, including disputes over its constitutionality and whether courts might revisit prior precedent. Axios’s report on the bill and challenges describes that debate.
On July 14, 2026, Axios reported that opponents had submitted more than 500,000 signatures for a repeal initiative and that a November ballot contest was expected. That article also reported opposing arguments: supporters described revenue for state needs and tax relief, while opponents warned of constitutional, expansion and economic risks. Those are positions in the political debate; the July report does not establish the final legal or election status as of October 2026. Axios’s July 14 report covers the initiative activity.
Recommended Free Tools
How to judge whether Washington is the right state for a business
A headline about tax increases cannot answer whether Washington is the best place for a particular company. A useful comparison needs to match the business’s size and industry, and compare actual costs and outcomes across states for the same years.
- Tax design and effective burden: Compare the business’s likely total state and local tax burden, not just a headline rate. Include whether taxes apply to gross receipts or profit, and account for credits, thresholds and exemptions.
- Operating costs: Consider labor availability and wages, infrastructure, market access, regulatory requirements and compliance costs alongside taxes.
- Business outcomes: Look for comparable data on company formation, investment and relocation, rather than treating industry predictions or anecdotes as proof of cause.
The sources available for these specific tax changes provide statutory rates, dates, thresholds and industry concerns, but not a consistent state-by-state comparison or a causal estimate of tax-driven departures. That means they support a careful conclusion about changed costs and documented concern—not a definitive ranking of Washington’s business climate.
Quick Recap
Best Value
Rank #4
- Comprehensive Income & Expense Planner: This 108-page financial planner helps you take complete control of your money. It includes dedicated sections for tracking every source of income and every expense, no matter how small. Whether you need to monitor daily spending, plan a monthly budget, or prepare for tax season, this planner gives you a clear, organized system.
- Clear Layout & Easy to Write: Each page features a clean, well-organized design with clearly labeled columns for income sources, expense categories, revenues, profits, and other relevant information. The organized sections simplify tracking and help you stay consistent with your bookkeeping routine.
- Enough Writing Space: This planner offers generous writing space for each entry, so you can record detailed descriptions, multiple transactions, or notes about upcoming bills. Each page gives you room to be thorough, perfect for tracking everything from grocery receipts to monthly rent, freelance income to utility bills.
- Portable and Convenient: This compact book measures 9.5” x 6.7” with a sturdy spiral binding, which is easy to carry in your bag, backpack, or keep on your desk. This portable planner makes it easy to stay on top of your money anytime, anywhere. Perfect for use at home, in the office, or on the go.
- Wide Usages: It is suitable for personal budgeting, family household expenses, small business bookkeeping, freelance income tracking, or even rental property management. It's also great for college students learning to manage money, couples saving for a big purchase, or anyone working toward debt freedom or savings goals
Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.
